Many solutions to support enterprises to join global supply chain
VietReader 18-09-2020, 17:26

Many solutions to support enterprises to join global supply chain

Vice-Chairman of the Ho Chi Minh City People’s Committee Duong Anh Duc (L) exchanged with delegates at the Sourcing Fair for Supporting Industry with Buyer 2020. (Photo: SGGP)

There were more than 250 face-to-face meetings between manufacturers and buyers to exchange trade opportunities.

At the event, 14 foreign-invested enterprises manufacturing end products presented a series of products that need suppliers in the fields of electronics, mechanical engineering, and high-tech medical. Many domestic enterprises said that these products are not difficult to produce.

Mr. Tong Viet Cuong, Director of Hiep Phuoc Thanh Manufacturing Co., Ltd., said that the company is currently supplying supporting industry products, including molds and plated products, to many global corporations, such as Samsung, Toyota, Honda, and Panasonic.

According to Mr. Cuong, to receive orders from the aforesaid FDI corporations, besides meeting many criteria of quality and price, enterprises must also meet the standards of social responsibility and on-time delivery. Of which, delivery must be within two hours, and the price must be globally competitive.

The above standards of FDI enterprises are fairly transparent. Domestic enterprises have had a long enough time to access and adjust internal production resources following the requirements. This process takes a lot of time and costs to implement, but in return, once being accepted, the company will stabilize production, as well as have huge supply opportunities.

Evaluating the supply capacity of supporting industry products of domestic enterprises, many FDI enterprises affirmed that there has been a remarkable improvement in recent years. Enterprises participating in the sourcing fair to connect the supply and demand of supporting industries this time have also been taking part in many supply chains of FDI enterprises. The representative of Panasonic Co., Ltd. said that at seven factories of Panasonic operating in Vietnam, the localization ratio of supporting industry products has accounted for 65 percent in quantity and 35 percent in value. As for Samsung Group, it has found 45 out of 200 enterprises needed for the supply chain of supporting industry products in Vietnam. Therefore, the chance for them to expand their supply capacity is quite feasible.

Ms. Le Bich Loan, Deputy Head of the Management Board of the Saigon Hi-Tech Park, said that the supply chain breakdown due to the recent Covid-19 pandemic in China, the US, and Europe has recently forced many FDI enterprises to diversify their supply chains, as well as increase the ratio of local supply of supporting industry products. This has created a great opportunity for domestic enterprises to quickly join the global supply chain, especially competent enterprises but their competitiveness in product pricing is still limited.

However, it is obvious that Vietnam’s supply enterprises still only provide simple products instead of participating in the supply of core value products, so the added-value is not high, and it is difficult for Vietnamese enterprises to improve their low positions in the global supply chain. Many enterprises have pointed out the reason that although there are many solutions to support capital, land fund, and tax, the administrative procedures remain complicated. Capital disbursement is extremely slow while land prices increase rapidly, especially in provinces with a lot of FDI enterprises producing end products. Therefore, although suppliers make efforts to innovate, it is difficult for them to keep up with the requirements of FDI enterprises.

Amid that situation, speaking at the event, Mr. Duong Anh Duc, Vice-Chairman of the municipal People’s Committee, emphasized that to accelerate the progress of joining the global supply chain for domestic enterprises, the city had directed the Department of Industry and Trade, the Ho Chi Minh City Center of Support Industries Development to deploy many solutions to support enterprises to invest in developing supporting industries, including capital for innovating technology, seeking supply markets, strengthening production capacity by improving management capacity, reducing production costs, and reducing inventory and defective goods.

Besides, the maintenance of the annual sourcing fair to find supporting industry suppliers is an opportunity for domestic manufacturers to find markets, access, and gradually participate in the global supply chain. This is also an opportunity for small and medium-sized enterprises to actively innovate and creatively improve their capacity in production and business, contributing to the production and promotion of the image of supporting industry products and enterprises in Ho Chi Minh City.

By Ai Van – Translated by Thuy Doan